The Magazine

Give Me Bandwidth . . .

No one to root for in the net neutrality debate.

Jun 26, 2006, Vol. 11, No. 39 • By ANDY KESSLER
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FINDING IT HARD TO UNDERSTAND the "net neutrality" debate? On one side are the hip, cool, billionaire web service companies like Google, eBay, Yahoo, and even Microsoft. Net neutrality is their rallying cry. Despite the fact that they are basically schlocky ad salesmen on a grand scale, they're pushing this quaint, self-serving '60s notion that the Internet is a town square--all for one and one for them, or something like that. Everyone should be allowed to hang out in the town square and use it as they please, one low price, eat all you want at the buffet.

On the other side are the monopolist plumbers like Verizon and AT&T and Comcast. These are the folks who laid the pipe that delivers the Internet--the blogs and pirated movies and photos of Shiloh Brangelina--to your house or office. They think the Internet is more like a giant shopping mall, and they're the mall owners. You the customer can walk around as if you were in the town square, but the tenants (see billionaire web service companies above) are going to have to pay for the upkeep of the premises. If they're one of the anchor stores, they might pay a lot.

In an effort to skim their own fees off the Google crowd, lobbyists and Congress have also taken up the fight. So far, the telcos are winning--a bid to add net neutrality language to a telecommunications bill was shot down 269-152 by the House on June 8--but this is one of those bizarre issues where both sides are off their rocker.

If Congress doesn't act, does this mean Apple might pay 10 cents per iTunes download to Bellsouth? Will Google have to pay 5 percent of ad revenue to AT&T for speedy delivery of your search results? Will we pay $1 per video played in your browser to Comcast? Silly, right? Well, not so fast, and that's the problem.

Telcos and cable companies have no choice but to lobby for legislation that bars neutrality. Because without the ability to extract money from the webbies for the use of their not-so-fast Alexander Graham Bell-era wires (forget that you and I already overpay for this), AT&T or Verizon might not have any business model going forward. With no real competition, they'd rather keep U.S. telecommunications in the Flintstone era and overcharge for calls to Grandma than upgrade their networks. Since 1998, telecommunications companies have outspent computer and Internet firms on politicians $231 million to $71 million, just to keep the status quo.

Hate to break the news, but your "fast" DSL Internet access is no longer considered high speed. In parts of the world, cell phones are faster. Have you wondered why Internet video doesn't fill your computer monitor and look like a DVD, but instead is pixelated dreck in a tiny one or two inch square? Well, Comcast is dragging its heels, too. With better video over the Internet, who would want E!, let alone the Style Network? Because of this Fred and Wilma thinking, the United States is 16th in the world in broadband use (behind Liechtenstein!) with East Timor catching up fast. The French may burn Citroëns, but they get 10 megabits for 10 euros--50 times your "fast" Internet access for half the price. That's just not right.

We'll never get 10 megabits to our homes, let alone the multiples of that speed that are possible and affordable today if these telco Goliaths keep covering up their crown jewels. As Dean Wormer might put it: Fat, drunk (on profits), and stupid is no way to go through life, son.

But the answer is not regulations imposing net neutrality. You can already smell the mandates and the loopholes once Congress gets involved. Think special, high-speed priority for campaign commercials or educational videos about global warming. Or roadblocks--like requiring emergency 911 service--to try to kill off free Internet telephone services such as Skype. And who knows what else? Network neutrality won't be the laissez-faire sandbox its supporters think, but more like used kitty litter. We all know that regulations beget more lobbyists. I'd rather let the market sort these things out.

But what market? Phone lines, cable, and cellular--i.e., the means of Internet access--are all regulated; their operators are quasi-monopolies. Even if you end the monopolies, the incumbents have the advantage of a huge head start. Broadcasters own valuable spectrum and feed us cretinous shows like Wife Swap and The Bachelor. Cable has a lock on our homes via local franchise bribes, er, fees, so we get Lifetime and Animal Planet that no one watches. Satellite TV is content to charge just a hair under cable's pricing umbrella. For phone companies, too much Internet bandwidth would threaten their bread and butter--overpriced $25 per month (it's worth no more than $1) phone service and hot innovations like call waiting.